In patients with HIV infection (AIDS), there is an unexplained dementia. Active virus is not observed in brain cells so it is proposed that a soluble factor released from the virus may be affecting the patients. We previously found that the HIV viral protein TAT (which is a transactivator of the HIV-LTR promoter) promotes neural cell adhesion in vitro and blocks laminin-mediated process outgrowth. Using recombinant TAT, synthetic TAT (it is 86 amino acids long) and smaller synthetic peptides duplicating sequences in TAT, residues 49-57 were found to be responsible for the biological activity. Using peptide affinity chromatography and coimmuno-precipitation of labeled cell membranes, a 90 kd TAT receptor on neuronal cells was identified. Direct injection of TAT into the brains of rats caused impaired motor function and destruction of large amounts of brain tissue often resulting in death. The smaller peptides were without activity. Studies are focussing on characterizing the receptor and defining the mechanisms of TAT toxicity on neural cells. These data demonstrate that TAT has a strong effect on neural cells and suggest a possible mechanism to explain the neurologic changes and dementia observed in AIDS patients.